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LAST YEAR'S ELECTION was something completely new for 40-year-olds: for the first time since they were able to vote, they wouldn't be choosing either a Bush or a Clinton. And if Hillary had won the Democratic nomination, Americans in their fifth decade would see one of those names on the presidential ballot for the sixth straight time.

But you'd have to be into your sixth decade to have been of voting age when the dollar was anything but a free-floating currency without a defined value. That would exclude our youthful president and his Treasury secretary.

For the first time in adulthood of anybody who doesn't qualify for AARP, however, there is a suggestion of reform of the current, dollar-centric system. It may not go anywhere anytime soon, but it would be foolish to ignore it.

President Richard Nixon ended the dollar's convertibility into gold at a rate of $35 an ounce on Aug. 15, 1971, and by March 1973, all major currencies were free to float. Under the Bretton Woods regime, currencies were pegged to the dollar, which in turn was fixed in terms of gold. For the last 36 years, the dollar's value has been set by the currency markets.

In theory, floating exchange rates were supposed to allow economies to reduce trade deficits by letting the currency adjust. A weaker exchange rate would drive up the cost of imports and make exports more competitive, thus reducing deficits. Under fixed exchange rates, the economy would have to be constricted to eliminate imbalances, reducing imports and lowering prices to make exports more competitive. That's a more painful process than the seemingly benign adjustment of the exchange rate to bring things into balance.

That's what the textbooks said anyway. The reality has been more complicated.

It's the flow of money that dominates the flow of goods, not the other way around. Governments, moreover, manipulate the quantity or the value of money to their ends, which is also outside the textbook model.

The rest of the world holds dollars as investments. Foreign central banks use dollars predominantly for their reserves. Dollar-based financial markets are the deepest and biggest in the world. In other words, the liabilities of the U.S. are the main assets of the rest of the world.

This has conferred on the U.S. something that King Midas couldn't imagine. We can effectively print dollars and the rest of the world takes them. Imagine what you'd do with a money-printing press in your basement. You'd spend like crazy on stuff. Or you'd acquire real assets, such as houses.

Extend that notion globally. Since the rest of the world takes our paper money, we get to acquire their products or assets in exchange. As a result, America can spend more than it earns and save less than it invests. The difference is made up by foreigners accepting our dollars and lending them back to us.

The clearest example is China. Its massive trade surplus with the U.S. gives it boatloads of greenbacks. The textbook says that would make its currency, the yuan, rise, which would make Chinese exports dearer in world markets. That's the last thing Beijing wants as it tries to keep the economy growing at 8% to provide jobs and maintain social stability.

So, China's central bank accumulates billions and billions of dollars, which it invests in U.S. securities. Much of that money went into Fannie Mae and Freddie Mac securities, which in turn helped finance the U.S. housing boom. But the bulk of China's dollars went into U.S. Treasury securities, which helps fund the budget deficit.

Last summer, when there were concerns about Fannie's and Freddie's finances, especially on the part of foreign investors such as China, Uncle Sam bailed them out and wound up placing them into conservatorship.

More recently, Chinese officials have voiced concern about their massive holdings of U.S. Treasuries and dollar assets in general. A couple of weeks ago, Premier Wen Jiabao expressed concern about the safety of U.S. Treasury securities. Last month, a Chinese official put it bluntly: "We hate you guys. Once you start issuing $1 trillion-$2 trillion, we know the dollar is going to depreciate." But given the lack of viable alternatives, they're stuck buying Treasuries, he said.

Now comes a suggestion from the head of China's central bank for an alternative to the dollar, echoing a similar proposal made previously by Russia. Those nations proposed expanding the use of the International Monetary Fund's Special Drawing Rights as a substitute for dollars. SDRs, based on a basket of currencies, have never gained much usage except for IMF transactions.

Asked about global confidence in the dollar at Tuesday's press conference, President Obama called the currency "extraordinarily strong" and dismissed the need for an international currency.

Americans should realize that the nation's most successful export isn't Coke or Boeing airliners or Microsoft software or even Hollywood films. It's the dollar, which is accepted around the world as a store of value.

Under the current floating exchange-rate system, the U.S. wasn't limited by the gold in Fort Knox as to how many dollars it could issue. It was limited only by the willingness of the rest of the world to accept greenbacks in payment for their goods and services.

No other country has that ability. Europe has tried to get a piece of the action by establishing the euro, but the currency has gotten a relatively small share of the market.

But, for the first time since the early 1970s, America runs the risk of being constrained by international considerations. Nixon could get around them simply by abrogating the promise to maintain the dollar's value in gold. Now, America's main creditors could impose the discipline on the U.S. that gold couldn't.

Next week, the Group of 20 nations will discuss the unprecedented stresses facing the world's economy. President Obama may not be able to dismiss calls for a new monetary order as easily as he did at Tuesday's press conference, even if the dollar is unlikely to be supplanted for some years to come.